A novel new approach to underwriting the costs of next generation high speed Internet - fiber to the home while addressing the challenges of reducing energy consumption and CO2 emissions and providing new revenue model for service providers.

Executive Summary

One of the significant challenges facing network operators today is the high capital cost of deploying next generation broadband network to individual homes or schools. Fiber to the home only makes economic sense for a relatively small percentage of homes or schools. One solution is a novel new approach under development in several jurisdictions around the world is to bundle the cost of next generation broadband Internet with the deployment of solar panels on the owners roof or through the sale of renewable energy to the homeowner. Rather than charging customers directly for the costs of deployment of thehigh speed broadband network theses costs instead areamortized over several years as a small discount on the customer’s Feed in Tariff (FIT) or renewable energy bill. There are many companies such as Solar City that will fund the entire capital cost of deploying solar panels on the roofs of homes or schools, who in turn make their money from the long term sale of the power from the panels to the electrical grid. In addition there are no Energy Service Companies (ESCOs) and Green Bond Funds that will underwrite the cost of larger installations.

Friday, February 24, 2012

A novel way to fund broadband FTTH Internet - converting old coax/copper into microgrids

[I have long argued that we need to find new business models to
underwrite costs of next generation broadband – Fiber to the Home (
FTTH) if we ever hope to breakup the existing broadband oligopoly. The
lobbying powers of cableco/telcos are so intense and overwhelming that
even the few community broadband initiatives that still remain are
likely doomed from this relentless onslaught.

If we can find a
business model that effectively makes broadband free, then we might be
able to undermine the smothering of innovation and economic growth by
the incumbents. A couple of business models that I have proposed to
deal with this problem such as “homes with tails” – where the customer
owns the last mile and/or “bundling broadband with energy bill” have
failed to gain any traction for a number of reasons. But the
overwhelming challenge in all these cases remains the high upfront
capital cost due to the tyranny of the takeup.

Takeup rates are
the single most important factor in determining up front capital costs:
with a 100% takeup the cost per home of FTTH can be as low as $500.
With 50% takeup the cost is around $1500-2000 per home and with 10%
takeup the cost per home can be as much as $6000.

As noted by the
International Energy Agency in Paris, in a report called “Gadgets and
Gigawatts” the typical home consumption of power from digital appliances
exceeds, in aggregate, the consumption of power from all the
traditional appliances in your home. A good example is the set top box.
A single DVR and one HD set-top box configuration can draw an average
of 446 kilowatt-hours of power per year: slightly higher than that of a
new refrigerator, according to a study from the National Resources
Defense Council . The cableco/telcos, who provide the box, have no
incentive to reduce this energy consumption, other than paying lip
service about their ersatz commitment to the environment.

Digital
appliances only draw a small amount of power, as opposed to traditional
appliances which have short bursts of large amounts of power. But the
fact that digital appliances are usually on 24 hours a day, or seven
days week means that even though they are only drawing a few milli-watts
at a time their annual power consumption can exceed that of traditional
appliances. A good example is the clock in your microwave oven.
According to the Economist magazine that little clock draws more power
over a year than the microwave oven itself!

Given that typical
household electrical bill is $1000-2000 per year, the energy cost of all
your digital appliances in a typical western home is somewhere between
$500 - $1000 per year.

Given this huge and growing power demand
from digital appliances, many people have advocated more energy
efficient products. But I am remain very skeptical that such a strategy
will work for a number of reasons:

(a) Neither the manufacturers
or incumbents have any monetary incentive to become more energy
efficient, as the costs are totally absorbed by the customer. And in the
case of set top boxes the customer usually does not have a choice of
box they can use so they cannot purchase a more energy efficient box;
(b)
The growth in the number of digital appliances in our home ( or
elsewhere) is far out stripping any modest gains in efficiency;
(c) The Internet of things and embedded ICT will continue to spur growth and demand of digital appliances in the home;
(d)
Most of the world has yet to catch up to western homes where energy
consumption from digital appliances exceeds that of traditional
appliances; and
(e) Jevons paradox will plays a factor in all of this
where any gains in energy efficiency paradoxically promote energy
consumption

The biggest problem facing this planet is NOT energy
consumption. It is the type of energy we use. It is the energy from
fossil fuel power plants that is producing CO2 which is destroying this
planet. If we could convert all of our energy to renewable sources then
we would not be contributing to global warming. If all of our energy
came from renewable resources we need not be concerned about energy
efficiency. Considering the fact that a couple hours of sunshine hitting
the earth every day equals the entire ANNUAL energy consumption on this
planet, one begins to appreciate that we have no shortage of energy.

So
our biggest challenge is not to make these digital appliances more
energy efficient, but to insure that they only use clean renewable
power. Since digital appliances only draw small amounts of power at any
one time it would make sense therefore to power all Digital Appliances
from small renewable energy sources such as roof top panels or micro
windmills. But what happens when the sun sets, or if the wind dies? How
do you continue to provide power to all the digital appliances and more
importantly how do you get the power from the roof top to the devices
themselves? Various solutions have been proposed including use of Power
over Ethernet (PoE) or 400/60 HZ (400/50 HZ in Europe) multiplex power
systems on existing electrical distribution system. But another
alternative power deliver systems is to use the existing coax cable
and/or telephone copper wire in our homes and neighborhoods.

Coax
cable and telephone copper wires are already used to carry small
amounts of power to your home. They would also be ideal for the
deployment of small power microgrids where neighborhood solar panels or
windmills are connected to the copper/coax infrastructure to balance
power loads for digital appliances across the neighborhood.
Alternatively even the telephone or cable company could deliver
renewable power from their head end over their old copper/coax
infrastructure to the digital appliances in your home. Given that a
typical home may spend over $500 year in power for their digital
appliances, this would be a bigger revenue opportunity for the
incumbents than delivering traditional broadband. There would also be
then a big incentive for these companies to deploy much more energy
efficient set top boxes and other devices, if they were also delivering
the power for those devices.

These energy savings could also be
used to underwrite costs of Fiber to the Home- FTTH. There are several
publicly traded energy or green revolving funds who underwrite energy or
green projects. Many utilities and municipalities also operate such
funds. Funding the deployment of FTTH would allow the old copper and
coax to be salvaged for a neighborhood microgrid for digital appliances.
The payback to the fund could then be made through the energy savings
from the microgrid. Some would argue that why not continue to use the
old copper/coax to deliver broadband as well. But I suspect the power
distribution network architecture and energy flows would make havoc with
any existing broadband infrastructure.
The biggest challenge is
that most people who work in the energy or utility field are, believe
it or not, more conservative and hide bound than those who work in
telecom/cable industry. Educating them on the energy costs of digital
appliances and the fact that digital devices don’t require the same
megawatt mindset solution of traditional power utilities will be a big
hurdle.

A good place to test out the concept of such a
FTTH/Micorgrid would be at our universities or colleges, especially that
are partnering in FTTH trials such as Case Western, where they have
extensive telephone copper networks owned by the institutions. – BSA]

Your set top box consumes more power than your fridge
http://www.pcmag.com/article2/0,2817,2387602,00.asp

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About Me

Bill St. Arnaud is a R&E Network and Green IT consultant who works with clients on a variety of subjects such as the next generation research and education and Internet networks. He also works with clients to develop practical solutions to reduce GHG emissions such as free broadband and dynamiccharging of eVehicles (See http://green-broadband.blogspot.com/) . View my complete profile